Bonds vs Equity
Why you should pick bonds
1. Bonds are a more cautious investing option
Bonds, unlike stocks, have fixed interest rates and a guaranteed return. You are guaranteed a particular percentage yield on your initial investment, regardless of how the bond’s value varies, albeit a slightly lesser one than you might expect from a stock investment.
2. There is a payoff for taking a risk
When deciding whether to invest in bonds or stocks, you must weigh the risks and benefits. Bonds are safer for a reason: you can expect a lower return on your money when you invest in them. Stocks, on the other hand, often mix some short-term uncertainty with the possibility of a higher return on your investment.
3. You have the option of playing the long game
For a variety of reasons, stocks might be particularly tempting to younger investors. For one thing, you’ll have more time to make up for any prospective losses. “Over a long enough time…there would have to be a dramatic change in stock market behaviour for you to come out worse on the back end,” You may also not have the same responsibilities as an older investor (such as sustaining a family), allowing you to take more risks with your assets.
4. Diversify when in doubt
Are you still undecided about whether you should invest in stocks or bonds? When it comes to investing, there is no one-size-fits-all solution. Bonds and equities react to negative events in different ways, so combining the two can help your portfolio stay more stable.
Of course, regardless of how you choose to invest, the most important thing is to get started as soon as possible. Allow compounding to do the heavy lifting for you, and you’ll be saving money and accumulating wealth in no time.
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